Analysts at Berenberg slightly lowered their target price on manufacturer Rotork from 425.0p to 410.0p on Friday following the group’s recent trading update.
Berenberg noted that after Rotork issued a trading update for the four months to 31 October on Thursday, share prices declined 7% on the day as despite demand remaining strong, supply chain constraints resulted in a downgrade to full-year 2021 estimates due to an anticipated revenue slippage into 2022.
The German bank, which reiterated its ‘buy’ rating on the stock feels this offers investors an attractive entry point, given that the oil and gas sector was edging closer to a pickup, the methane reduction opportunity had intensified in recent weeks following COP and that there was scope for 2022 to be “a transformational year” for the group.
“We see a scenario where FY 2022 could turn out very positive for Rotork. From a top-line perspective, a combination of a record order book heading into Q1, a potential recovery in oil and gas and tailwinds from methane reduction creates scope for an upside surprise,” said Berenberg.
Analysts at Canaccord Genuity raised their target price on mining outfit Touchstone Exploration from 180.0p to 200.0p on Friday following the firm’s “surprise, but upbeat” announcement of an oil test in its Royston-1 well.
Canaccord said following Touchstone’s analyst presentation and third-quarter results, it was now possible to add “a little more flesh to the bones” of the well test result.
The Canadian bank said its initial view that the oil discovery was “an important step forward” had been confirmed, though it also recognised that there was still “plenty to be done” to fully evaluate the scope of the commercial potential at Royston and the surrounding Ortoire licence.
Canaccord, which reiterated its ‘speculative buy’ rating on the stock, said the tested zone, the first and deepest of three planned, looked the least promising in terms of reservoir rock properties, yet the test also produced light sweet crude despite the equipment used being designed for gas flow.
“We think the information provided so far provides the foundation for thinking that Royston could be both a gas/wet gas (to be confirmed following two tests expected to be completed before YE21) and an oil development. Furthermore, the discovery of oil in the deepest levels of Royston-1 adds support to the possibility of oil in the nearby but deeper Krakken prospect,” said Canaccord.
